Bank deposit insurance: M. Nagaraju, Secretary, Financial Services Department, said on Monday (February 17) that the government is actively considering increasing the deposits of deposit insurance from the current five lakh rupees. Currently, deposits of up to Rs 5,00,000 are covered under the Deposit Insurance and Credit Guarantee Corporation (DICGC) Deposit Insurance Scheme. A few days after the alleged scam of the New India Co-operative Bank of Maharashtra, Nagaraju said that work is going on on such a proposal.
In a press conference in the presence of Finance Minister Nirmala Sitharaman, he said, “The issue is to increase the insurance limit … This is being actively considered. As soon as the government approves, we will issue its notification.” However, Nagaraju refused to comment on the crisis of New India Co-operative Bank. He said that the Reserve Bank of India (RBI) is watching the matter.
The deposit insurance claim begins when a lender sinks. The Deposit Insurance and Credit Guarantee Corporation (DICGC) has been paying such claims over the years. This body collects premiums from banks for the cover provided by it. Then most of the claims have been made in the case of cooperative lenders.
After the PMC Bank scam, the DICGC insurance limit was increased from Rs 1 lakh to Rs five lakh in 2020. According to PTI, Economic Affairs Secretary Ajay Seth said that the cooperative banking sector is running well under the supervision of RBI. He termed the overall position of the region as strong.
He said that no one should doubt the entire area due to crisis in any one bank. It is a regulator’s job to take action against guilty units. According to reports, 90 percent of the 1.3 lakh depositors of New India Co-operative Bank will come under DICGC.
The scam in the bank was detected in a physical examination, which revealed that cash worth Rs 122 crore shown in the book was missing. Investigation revealed that the bank’s general manager-in-law Hitesh Mehta had given a large part of the allegedly embezzled amount to a local builder.
RBI data shows that DICGC settled claims worth Rs 1,432 crore in FY 2023-24. The entire amount in this was for cooperative banks. The number of registered banks with DICGC was 1,997 till March 31, 2024. These include 140 commercial banks and 1,857 cooperative banks.
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The current Rs 5,00,000 limit covers about 98 per cent deposit accounts. In the case of commercial banks, only 41.9 percent deposit is under the insurance cover. Whereas in the case of cooperative banks, this figure is up to 63.3 percent.